African Eagle Resources PLC African Eagle Resources Plc : Proposed Disposal And Proposed Adoption Of Investing Policy
July 02 2013 - 1:00AM
UK Regulatory
TIDMAFE
African Eagle Resources plc ("African Eagle" or the "Company") (AIM:
AFE; AltX: AEA) is pleased to announce that it has agreed to sell
substantially all of its subsidiaries, assets and liabilities to
Blackdown Resources (UK) Limited, a subsidiary of Cienega S.a.r.l, which
is ultimately owned by Nick Clarke and his family trusts.
All definitions used in this announcement have the meanings ascribed to
them in the Appendix set out at the end of this announcement.
The Disposal constitutes a fundamental disposal pursuant to Rule 15 of
the AIM Rules and requires the approval of Shareholders. Following the
Disposal, African Eagle will be classed as an Investing Company under
Rule 15 of the AIM Rules and its proposed Investing Policy (as well as
details of the Disposal) will be set out in a Circular, which shall be
sent to Shareholders within the next few days and which will then also
be made available for download from the Company's website. Having
reviewed a number of business sectors and potential opportunities it is
the opinion of the Board that the Company's Investing Policy should be
to seek opportunities to invest in the natural resources, infrastructure
and services sectors.
The Board believes that the Disposal will allow the Company to focus on
an alternative investment proposition that the Board believes can
provide the best opportunity for an enhancement in value to Shareholders
over the long term.
Completion of the Disposal is conditional, inter alia, on the approval
of Shareholders at the General Meeting. The Board will also be seeking
the approval at the General Meeting for its proposed new Investing
Policy. The Circular will convene a General Meeting to approve both the
Disposal and the Investing Policy of the Company.
Background to and reasons for the Disposal
On 15 May 2013, the Company announced that, following discussions with
its major Shareholders and other institutional Shareholders to assess
the potential to raise additional equity financing to further progress
the Group's projects, investment appetite for the development of nickel
laterite projects was limited and the Directors had been unable to
identify any source of funding for the Group.
As a result, the Board determined that, in order to preserve the
Company's cash position, it would no longer continue to provide funding
to its Tanzanian subsidiaries beyond the expenses associated with the
renewal and maintenance of the Group's main licences in relation to the
Company's nickel assets.
Since this time, the Directors have been taking steps to minimise costs
to the Group in order to preserve the Company's cash position and have
been engaging in discussions with the Company's major Shareholders and
others to consider the strategic options for the Group.
In the Chairman's statement in the annual financial statements, for the
year ended 31 December 2012, it was stated that the Board had decided to
progress three initiatives:
-- to continue to seek a purchaser for the Dutwa assets, with the
consideration being in cash and/or a carried interest;
-- to recover any value possible from the Miyabi JV and other non-Dutwa
assets via a sale of our interest for cash or equity; and
-- to maintain the AIM-listed plc with a view to seeking new investment
opportunities in the natural resources and related sectors, thereby
retaining a possibility of securing some upside for Shareholders.
The alternative option to the Company was to liquidate the Tanzanian
assets and return any residual cash in the Company to Shareholders via a
members' voluntary liquidation. This option was rejected by the Board
for two reasons; firstly the expected residual cash in the Company after
closing out all business issues and the cost of liquidation was
considered unlikely to be significant in terms of cash per share.
Secondly, following discussions with major Shareholders, the Board's
view was that, the Disposal which will result in the Company becoming an
Investing Company and therefore having the expectation that an injection
of new assets into the Company will be forthcoming, whilst not
quantifiable now, could (if achieved) potentially offer greater value
for Shareholders.
The proposed Disposal and adoption of the Investing Policy represents
the culmination of these deliberations and one which the Board has
concluded is expected to provide the best opportunity for an enhancement
in Shareholder value over the long term. In addition, it removes the
Company from its liabilities connected to Blackdown Minerals, including
the potential liability in respect of the review of previous tax filings
by the Tanzanian Revenue Authority, as announced on 2 April 2013, which
will remain with the relevant Tanzanian subsidiary of Blackdown
Minerals.
On 26 June 2013, the Company undertook a restructuring of its Group
whereby Blackdown Minerals was incorporated as a new subsidiary of the
Company, in preparation for its potential sale. Blackdown Minerals is
the holding company for substantially all of the assets and business of
the Group, including but not limited to the Group's licences in respect
of the Dutwa Nickel project, the Zanzui Nickel and Cobalt project, its
licences in respect of Igurubi and Msasa as well as the 50 per cent.
interest of the Group in the Miyabi gold project in Tanzania. No profits
are attributable to these assets.
Further to the discussions with major Shareholders and other investors
mentioned above, the Company announces that it has entered into the SPA
with the Purchaser pursuant to which the Company has agreed, subject to
certain conditions, to sell 90 per cent. of the issued share capital of
Blackdown Minerals to the Purchaser for a total cash consideration of
US$100,000.
Under the terms of the Disposal, the Company will retain a shareholding
of 10 per cent. of the issued share capital of Blackdown Minerals.
The Company has a 'free carry' and anti-dilution rights in respect of
its 10 per cent. shareholding up until the Funding Condition is met,
such that if any shares in Blackdown Minerals are issued, the Company
will be issued with a proportionate number of shares to maintain its 10
per. cent shareholding, and the Purchaser will fund (or arrange funding
of) the payment for those shares.
The Purchaser, Blackdown Resources (UK) Limited is a subsidiary of
Cienega S.a.r.l, a company which is ultimately owned by the Clarke
Family.
The Clarke Family is also a Shareholder, holding approximately 3 per
cent. of the entire issued share capital of the African Eagle.
Nick Clarke went to the Camborne School of Mines graduating with a BSc
in Mining and is an entrepreneur having founded and sold two trading
house businesses. The Clarke Family companies have recently been
investing in mining related businesses around the world.
Details of the Disposal
Under the terms of the SPA, the Company has agreed to sell 90 per cent.
of the issued share capital of Blackdown Minerals to the Purchaser, for
a total cash consideration of US$100,000. Completion of the Disposal is
subject to two conditions:
1. approval of the Disposal by the Shareholders; and
2. written consent to the Disposal from the relevant mining licensing
authority in Tanzania (a requirement under Tanzanian law).
The application for consent from the Tanzanian mining licensing
authority is in progress and is expected to be submitted shortly after
the date of the Circular. Although there is no specified time frame for
receipt of a response from the relevant Tanzanian licensing authority,
the Directors are confident that the consent will be forthcoming.
On Completion, the Company will also enter into the Shareholders'
Agreement which shall regulate the relationship between the Company and
the Purchaser in respect of their shareholding in Blackdown Minerals in
the form normal for a transaction, and resultant shareholder positions,
of this nature.
The other material terms of the Disposal, including the terms of the
Shareholders' Agreement are:
- the Purchaser has the right to rescind the SPA prior to
completion of the Disposal in the event that any of the warranties that
the Company provides as to its title to the shares of each member of the
Group is incorrect;
- the conditions to completion of the Disposal must be waived or
fulfilled by 31 August 2013 (or such later time as agreed between the
Company and the Purchaser);
- the Company has provided standard warranties for the benefit of
the Purchaser in relation to the business of the Group;
- the Company has limited its liability under the Disposal to a
maximum aggregate amount of US$100,000 (excluding costs and expenses);
- the Company has agreed to standard restrictions on the conduct
of its business between signing the SPA and completion of the Disposal;
- the Company is entitled to nominate a director to the board of
Blackdown Minerals for so long as it holds 10 per cent. of its issued
share capital;
- from completion of the Disposal until the Funding Condition is
met, Blackdown Minerals will be restricted from carrying out certain
activities without approval from the Company, including the issue of new
shares;
- Blackdown Minerals will be restricted from carrying out certain
activities without approval of 91 per cent. of its shareholders,
including significant disposals of its assets and the payment of
dividends;
- the Company has a 'free carry' and anti- dilution rights up
until the Funding Condition is met, such that if any shares in Blackdown
Minerals are issued, the Company will be issued with a proportionate
number of shares to maintain its 10 per cent. shareholding, and the
Purchaser will fund (or arrange funding) of payment for those shares;
- the Company has the right to require the Purchaser to acquire
its entire shareholding within one year of the Funding Condition being
met (at a price to be agreed between the parties and, if no agreement is
reached, at the open market price of the shares agreed by an expert);
and
- neither the Company nor the Purchaser can transfer their shares
in Blackdown Minerals without first offering those shares to the other
shareholder (except to the extent that the tag along provisions
contained in the articles of association of Blackdown Minerals are
followed).
The Directors intend to use the US$100,000 cash consideration received
by it for general working capital purposes, including, inter alia, to
fund the expenses that it has incurred in executing the Disposal.
The Company's operations following the Disposal
On completion of the Disposal, the assets (other than cash) that the
Company will hold will be its 10 per cent. retained interest in
Blackdown Minerals, 533,333 shares in Kibo Mining Plc and 9,050,000
shares in Elephant Copper Ltd. The Company intends to retain its
shareholding in Blackdown Minerals until such time as the Directors deem
it to be in the best interests of Shareholders to dispose of them;
however the Directors currently have no such intention to do so. As at
1 July 2013, the Company had cash of GBP567,144.
The Company intends to use the funds that become available to it
following Completion for general working capital purposes, including
inter alia, to meet its costs arising out of the Disposal and to pursue
the proposed Investing Policy until such time as it can make investments
in accordance with the proposed Investing Policy, further details of
which are set out in paragraph 5 below.
The Directors consider that it is in the best interests of the Company
and its Shareholders to proceed with the Disposal to provide greater
opportunities to generate capital for the Company and to remove from the
Company its liabilities connected to Blackdown Minerals, including the
potential liability in respect of the review of previous tax filings by
the Tanzanian Revenue Authority, as announced on 2 April 2013, which
will remain with the relevant Tanzanian subsidiary of Blackdown
Minerals.
On completion of the Disposal, the Company will be re-classified as an
Investing Company under the AIM Rules as, by virtue of the Disposal, the
Company is disposing of "substantially all of its trading business,
activities or assets". An "Investing Company" is a company which has,
as its primary business or objective, the investing of its funds in
securities, businesses or assets, and is also subject to additional
regulation under the AIM Rules.
An Investing Company is required to produce an investing policy which
describes the policy that it will follow in relation to asset allocation
and risk diversification, and that policy must be approved by
Shareholders. Details of the Company's expected Investing Policy are
set out below and will be set out in full in the Circular.
Investing Company and Investing Policy
The Board has determined that the Company's Investing Policy will be to
seek opportunities in the natural resources, infrastructure and services
sectors.
The Company's objective is to generate an attractive rate of return for
Shareholders, by taking advantage of opportunities to invest in the
natural resources, infrastructure and services sectors. There will be no
limit on the number of projects into which the Company may invest, and
the Company's financial resources may be invested in a number of
propositions, or in just one investment, which is likely to be deemed to
be a reverse takeover pursuant to Rule 14 of the AIM Rules.
The Company will seek investment opportunities to exploit rights to
natural resources or interests in infrastructure and services sectors
worldwide, which the Directors believe are undervalued or present
significant growth opportunities and where one or more such transactions
have the potential to create value for Shareholders. This may be
achieved through acquisitions, partnerships or joint venture
arrangements. Such investments may result in the Company acquiring the
whole or part of a company or project.
The strategy of the Company will be to leverage the contacts of the
Board to investigate the current opportunities available to it, with a
view to identifying appropriate target investments in the natural
resources or infrastructure and services sectors with some or all of the
following characteristics:
- a strong management team;
- significant growth prospects;
- the probable benefits of achieving enhanced potential from
access to additional working capital; and
- the likelihood of benefits accruing from being part of a group
with publicly traded shares.
The Directors' preference is to acquire 100 per cent. of any potential
target investment in order to obtain the full benefit of their growth
prospects. However, equity interests of less than 100 per cent. will be
considered if the opportunity is compelling.
The Company's Investing Policy is intended to be long-term, but if
circumstances, arise whereby an acquired business or company may be
floated in its own right, or disposed of at a suitable premium, such
opportunities will be considered.
Under the AIM Rules, the Company is required to make an acquisition or
acquisitions which constitute a reverse takeover under the AIM Rules or
otherwise implement its Investing Policy within 12 months of the date of
the General Meeting, failing which the Ordinary Shares would be
suspended from trading on AIM in accordance with AIM Rule 40.
If the Company's Investing Policy has not been implemented within 18
months of the date of the General Meeting then the admission to trading
on AIM of the Ordinary Shares would be cancelled and the Directors will
convene a general meeting of the Shareholders to consider whether to
continue seeking investment opportunities or to wind up the Company and
distribute any surplus cash back to Shareholders.
Board composition following the Disposal
As announced on 24 June 2013, Trevor Moss stepped down as Chief
Executive Officer of the Company with effect from 28 June 2013 and
Robert McLearon was appointed to the Board as interim Managing Director
with effect from 24 June 2013.
The Directors will review the composition of the Board on an ongoing
basis and intend to appoint additional new executive and/or
non-executive directors at appropriate stages in the Company's
development.
Recommendation
The Directors consider that the Disposal, the Investing Policy and all
Resolutions to be put to the General Meeting are in the best interests
of the Company and the Shareholders as a whole and are most likely to
promote the success of the Company for the benefit of its Shareholders
as a whole.
Accordingly, the Directors unanimously recommend that Shareholders vote
in favour of all the proposed Resolutions, as the Directors intend to do
in respect of their own beneficial shareholdings in the Company.
The Company has received irrevocable undertakings to vote in favour of
the Resolutions to be proposed at the General Meeting from Trevor Moss
and Dr. Christopher Pointon in respect of a total aggregate number of
1,937,500 Ordinary Shares which represents 0.27 per cent. of the issued
ordinary share capital as at the date of this announcement.
Enquiries:
African Eagle Resources plc
Dr. Christopher Pointon, Chairman
Robert McLearon, interim Managing Director
+44 20 7248 6059
Strand Hanson Limited (NOMAD)
Stuart Faulkner
Angela Hallett
James Dance
+ 44 20 7409 3494
Ocean Equities Limited (Broker)
Guy Wilkes
+44 20 7786 4370
Russell & Associates, Johannesburg
Charmane Russell
Marion Brower
+27 11 880 3924
A copy of this announcement will be available on the Company's website
at www.africaneagle.co.uk as soon as possible. The content of the
website referred to in this announcement is not incorporated into and
does not form part of this announcement.
APPENDIX
DEFINITIONS
The following definitions apply throughout this announcement, unless the
context requires otherwise:
"AIM" the market of that name operated by the London Stock
Exchange plc;
"AIM Rules" The AIM Rules for Companies published by the London
Stock Exchange plc from time to time;
"Articles of the articles of association of the Company;
Association"
"Blackdown Blackdown Minerals Limited, a company incorporated
Minerals" in England and Wales with company number 08584007,
a wholly owned subsidiary of the Company;
"Board" the board of directors of the Company from time to
time;
"Circular" the circular to Shareholders to approve both the Disposal
and the Investing Policy;
"Clarke Family" means Nick Clarke together with his family trusts;
"Company" African Eagle Resources plc, a company incorporated
in England and Wales with company number 03912362;
"Completion" completion of the Disposal in accordance with the
terms of the SPA;
"Directors" the directors of the Company from time to time, each
a "Director";
"Disposal" the sale of 90 per cent. of the entire issued share
capital of Blackdown Minerals to the Purchaser;
"Funding where (i) the Purchaser (or its group) has, since
Condition" the date of Completion, incurred and met expenditure
of US$20 million or more on the exploration and development
of projects and assets in the business of the Group
or the Bankable Feasibility Study in respect of the
Dutwa Nickel Project in Tanzania has been completed;
and (ii) Blackdown Resources requires additional funding
and the Company does not wish to provide any additional
funding;
"General the general meeting of the Company, notice of which
Meeting" will be set out at the end of the Circular;
"Group" means, prior to completion of the Disposal, the Company
and its subsidiaries and subsidiary undertakings and
after completion of the Disposal, Blackdown Minerals
and its subsidiaries and subsidiary undertakings (as
applicable);
"Investing any AIM company which has as its primary business
Company" or objective, the investing of its funds in securities,
businesses or assets of any description.
"Investing the investing policy of the Company as described in
Policy" this announcement;
"Notice of the notice convening the General Meeting, to be set
General out in the Circular;
Meeting"
"Ordinary the ordinary shares of GBP0.001 each in the capital
Shares" of the Company;
"Resolutions" the resolutions to be proposed at the General Meeting;
"RNS" the regulatory information service operated by the
London Stock Exchange;
"Purchaser" Blackdown Resources (UK) Limited, a company incorporated
in England and Wales with company number 08582203,
a subsidiary of Cienega S.a.r.l, which is ultimately
owned by the Clarke Family;
"Shareholders" the holders of Ordinary Shares of the Company from
time to time, each being a "Shareholder";
"SPA" the conditional sale and purchase agreement dated
1 July 2013 between the Company and the Purchaser
relating to the Disposal; and
This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: African Eagle Resources PLC via Thomson Reuters ONE
HUG#1713456
http://www.africaneagle.co.uk/
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